Rethinking market demand: How can the new Commission create a strong circular single market in the EU?

The Single Market has been a fundamental driver of the European integration process, with its benefits documented and widely recognised. However, recent analyses including the Letta and Draghi reports clearly demonstrate that it remains highly fragmented, limiting EU companies' ability to scale up and compete internationally, while preventing EU citizens from fully reaping the benefits of integration.?

During yesterday’s European Parliament hearing of Jessika Roswall , nominated as Commissioner for Environment, Water Resilience, and a Competitive Circular Economy, Roswall committed to the creation of a Single Market for circularity, stating it will be crucial for the environment and driving the economy, together with a Single Market for waste. ?This would be a good step forward towards strengthening the circular economy, promoting circular products and business models.?

In this fourth article, we explore how the EU can strengthen market demand for a circular economy, focusing on ways to accelerate the adoption of circular technologies, business models, and practices within the single market. This builds on recommendations from our report "No Time to Waste: Driving the EU’s Resilience and Competitiveness through Circular Economy Transformation". The report identifies several barriers to demand for circular materials and products and proposes four key areas for EU action:?

1. Enhancing the competitiveness of circular economy solutions?

A significant barrier to a circular economy is the high cost and complexity of establishing reverse logistics infrastructure and systems of collection, transport and processing of used products, which are essential for maintaining the quality of recycled materials and enabling the effective return and reuse of products and materials.?

This challenge is amplified by international supply chains which, without universal tools such as universal Digital Product Passports, create uncertainty around product material composition, often rendering effective recycling unfeasible.?

As mentioned in the Commission’s report on the ‘European Research Area (ERA) industrial technology roadmap for circular technologies and business model’ the EU’s R&I ecosystems play a crucial role in the competitiveness in circular economy technologies, while also the Member States benefit from the framework given by the Single Market rules. The EU's circular economy framework, along with support for R&I, is essential for driving demand and advancing circular technologies. By promoting collaboration across industries and enabling swift tech deployment, the EU strengthens its global competitive edge.??

2. Creating lead markets for circular products and materials?

Wood, plastic, biowaste, aggregates from construction and demolition waste, and textiles: these are the five secondary raw materials that are functioning poorly at the moment due to uncertain demand, consequently reducing the willingness of private and public sectors to invest in technologies that would integrate these materials. ?

So far, circular economy policies have largely focused on supply-side support; however, these efforts must be paired with creating lead markets and demand for circular products and services, ensuring the financial viability and improving the resilience of circular industries.?

3. Support, promote and mandate circular product design?

The physical design and the assembly of circular material represent another relevant barrier. Most current products and consumer goods are indeed not designed for circularity, and this is reflected also in the high costs for disassembling, remanufacturing and repurposing them. ?

Innovation plays a key role also in overcoming this barrier: R&D processes are needed for new and innovative circular designs and processes, thus promoting the circular economy. Creating the right market conditions to support technological development and innovation is crucial for the circular economy transition. In this light, greater support for innovation, together with mission-oriented innovation policies focusing on companies and business models to go beyond traditional waste management policies are more imperative than ever.??

4. Improve data collection and reporting on embedded emissions and material composition?

Another significant barrier is represented by the lack of standardised data collection and reporting on embedded emissions, recyclability and reusability. Business leaders and companies have called for clearer, more transparent targets and key performance indicators, that are consistent and mandatory for all stakeholders to reduce the risks associated with circular investments.??

Furthermore, digitalisation and tools like the Digital Products Passports would enhance access to high-quality data, allowing for better product comparisons. Funding for innovation and scale-up is a keyway for the EU to promote circularity through digitalisation. For these reasons, the next European Commission should priorities reinforcing Europe’s global leadership in circular economy and digital product policy.??

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For a deeper dive, read our report and recommendations here. If you have missed the first article in this series, check it out here.? ?

What strategies can policymakers implement to create a more cohesive Single Market for circular products? Let us know your thoughts in the comments below!?